When Microsoft acquired PhoneFactor last fall, the handwriting was on the wall for the future of two-factor authentication for the company's consumer cloud offerings. Now it appears that handwriting is about to become a reality.

Microsoft's two-factor authentication is similar to that used by other service providers like Google and Dropbox, according to screen shots posted by LiveSide, a Microsoft consumer cloud news and information website.

With two-factor authentication enabled, when a user logs into their Microsoft account with any device that hasn't been designated as trusted by that user, in addition to their password they will have to submit a security code that's either sent to their mobile phone by Microsoft or generated by an authenticator app that can be installed on a handset.

LiveSide pointed out that such an authenticator app is already available at the Windows Phone Store.

As with Google's two-factor offering, certain apps won't work with Microsoft's authentication scheme. For those apps, a user has to generate an application password from a Microsoft website.

"Unfortunately we do not yet know the timing of the release of this new feature, but rest assured that it will be coming soon," LiveSide predicted.

While only a rumor at the moment -- Microsoft declined in an email to comment on LiveSide's report -- it's one that makes sense, said Wes Miller, a research analyst with Directions on Microsoft. "There's definitely some truth to it," he told CSO.

PhoneFactor, the Kansas company acquired by Microsoft in October 2012, had technology that looks like what was described by LiveSide, Miller observed. "They're taking the technology they got from PhoneFactor, embedding it and turning it into a part of their services which, for security-conscious users is a good direction," he said.

If Microsoft incorporates two-factor authentication into its consumer cloud, it would be a positive development for the technology, noted Sean Brady, director of product marketing at RSA, the security division of EMC. "Microsoft should be commended for recognizing that single-factor authentication -- mainly a password -- is no longer a reliable form of security," he said in an interview.

While no "magic bullet" for security, two-factor authentication can help allay security fears of consumers, he added. "It creates a sense of confidence among users," he said. "We're all now starting to lose faith in our passwords."

Greater adoption of two-factor authentication is a step in the right direction, asserted Aleksandr Yampolskiy, CTO of Cinchcast. "This can pose a challenge for hackers because they can't brute force a password," he said.

As valuable as two-factor authentication can be in protecting a user's account, it remains to be seen if the practice will be widely adopted by merchants and consumers. "There's going to be a large number of consumer and e-commerce websites which aren't going to start doing it," Yampolskiy said.

"When you add a second factor of authentication, it creates a wrinkle in the conversion experience of a user," he added.

The fewer wrinkles there are in a consumer's shopping experience, the fewer shopping carts that are abandoned before a purchase can be completed. "A lot of retailers are going to be afraid that they'll scare off customers," Yampolskiy explained.

In addition, if two-factor authentication is adopted on a site-by-site basis, consumers could be deluged with verification codes. "If you think usernames and passwords are a wonderful experience, we're about to start a sequel with two-factor authentication," Alex Doll, CEO of OneID, said in an interview.

This story, "Two-factor authentication ready to roll out at Microsoft" was originally published by
CSO.

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